U.S. v. Peterson

• Citation: 244 F.3d 385
• Decision Date: 08 March 2001
• Docket Number: No. 99-20165,99-20165
• Parties: (5th Cir. 2001) UNITED STATES OF AMERICA, Plaintiff - Appellee, v. PHILLIP S. PETERSON, THEODORE F. CLARK, SANDRA LYNN HOLICK, and DEBRA WILLS O'KEEFE, Defendants - Appellants
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 385

244 F.3d 385 (5th Cir. 2001)

UNITED STATES OF AMERICA, Plaintiff - Appellee, v. PHILLIP S. PETERSON, THEODORE F. CLARK, SANDRA LYNN HOLICK, and DEBRA WILLS O'KEEFE, Defendants - Appellants.

No. 99-20165

UNITED STATES COURT OF APPEALS, Fifth Circuit

March 8, 2001

[Copyrighted Material Omitted]

[Copyrighted Material Omitted]

Appeals from the United States District Court for the Southern District of Texas

Before DUHE and PARKER, Circuit Judges, and LINDSAY,^* District Judge.

LINDSAY, District Judge:

I. BACKGROUND AND PROCEDURAL HISTORY

This case involves a telemarketing operation called American Land Liquidators ("ALL"), which solicited fees from landowners to advertise their land for sale and put them together with buyers. ALL collected more than $9,000,000 in fees from about 27,000 property owners, between June 1992 and May 1995, when the business was shut down by the government investigation. It spent less than 3% of the income on advertising the properties to prospective buyers. Fewer than than 1% of the property owners who paid fees to ALL sold their property as a result, and those who did usually sold at very low prices. The government characterized ALL as a fraudulent scheme, contending that ALL misrepresented the number of buyers available and the likelihood of sales, and that the landowners would not have paid marketing fees to ALL if they had known the truth. A prior case led to the convictions of several managers and organizers. See United States v. Reissig, 186 F.3d 617 (5th Cir. 1999), cert. denied, 528 U.S. 1094 (2000). In this case, defendants Phillip S. Peterson ("Peterson"), Theodore F. Clark ("Clark"), Sandra Lynn Holick ("Holick"), and Debra Wills O'Keefe ("O'Keefe") were each convicted of one count of conspiracy to commit mail fraud, wire fraud, and money laundering, in violation of 18 U.S.C. 371; four counts of mail fraud, in violation of 18 U.S.C. 2, 1341; and three counts of money laundering, in violation of 18 U.S.C. 1956(a)(1)(A)(i).

They appeal their convictions, asserting several points of error: 1) that the evidence was legally insufficient to support the convictions; 2) that evidence of other conduct was improperly admitted under Fed. R. Evid. 404(b); 3) that a motion to sever by Holick and O'Keefe was improperly denied and a related limiting instruction, concerning the Rule 404(b) evidence, requested by them was not given; and 4) that a "deliberate ignorance" jury instruction should not have been given. As to most of the defendants' arguments, we find no error on the part of the trial court. While the trial court may have erred in refusing to give a requested limiting instruction concerning the Rule 404(b) evidence of other conduct, we conclude that the court's refusal does not constitute an abuse of discretion. We therefore affirm the convictions.

II. ANALYSIS

A. Sufficiency of the Evidence

Clark, O'Keefe, and Holick challenge the sufficiency of the evidence to support their convictions for mail fraud, conspiracy to commit mail fraud, and money laundering. In reviewing a challenge as to the sufficiency of the evidence, we consider the evidence in the light most favorable to the prosecution and affirm if a reasonable juror could conclude that the government proved all essential elements of the offense beyond a reasonable doubt. United States v. Richards, 204 F.3d 177, 206 (5th Cir.), cert. denied, ____ U.S. ___, 121 S. Ct. 73 (2000). All evidence is considered, not just that supporting the verdict, but the evidence need not conclusively disprove alternatives; the jury is "free to choose among reasonable constructions of the evidence." Id. If the evidence is relatively balanced, a reasonable juror could not convict beyond a reasonable doubt, and we would be required to reverse the conviction in such instance. Id.

To prove mail fraud, 18 U.S.C. 1341, the government must show (1) a scheme to defraud; (2) use of the mails to execute the scheme; and (3) the specific intent to defraud. United States v. Rico Industries, Inc., 854 F.2d 710, 712 (5th Cir. 1988). To prove conspiracy, 18 U.S.C. 371, the government must show (1) an agreement between two or more persons to pursue an unlawful objective; (2) the defendant's knowledge of the unlawful objective and voluntary agreement to join the conspiracy; and (3) an overt act by one or more of the members of the conspiracy in furtherance of the objective of the conspiracy. United States v. Dadi, 235 F.3d 945, 950 (5th Cir. 2000). "The government must prove the same degree of criminal intent as is necessary for proof of the underlying substantive offense." Id. Clark, O'Keefe, and Holick challenge the conspiracy and mail fraud convictions on the ground that there was insufficient evidence of the required intent to defraud. O'Keefe denies that ALL was engaged in a fraudulent scheme at all, asserting that it was just an unsuccessful venture. A similar argument was raised in Reissig. The evidence in the trial record as to the nature of the operation is essentially the same for this case as it was in Reissig. As we did there, we conclude that there was sufficient evidence to support the jury's conclusion that "ALL was a sham and . . . [a] fraudulent telemarketing scheme." Reissig, 186 F.3d at 619.

O'Keefe, Clark, and Holick further claim that, to the extent any representations they made were false, they had no knowledge that the representations were false. ALL was separated into a Seller's Division (the telemarketers, dealing with property owners) and a Buyer's Division (dealing with prospective buyers and handling complaints). The defendants were employed in the Seller's Division, and were ALL's top telemarketers. O'Keefe, Clark, and Holick claim that those in the Buyer's Division or in management would have been aware of the fraud but those in the Seller's Division were deliberately kept in the dark, thus negating the intent to defraud necessary for the mail fraud and conspiracy counts.

The government presented evidence at trial from which a reasonable juror could infer knowledge by the defendants that their representations (as to the large number of prospective buyers for the properties, how quickly the properties would sell, and so on) were false. For example, the defendants collected substantial sums from a large number of property owners (Clark - $137,805 from 379 individuals; Holick - $328,787 from 832 individuals; O'Keefe - $326,714 from 908 individuals). Only three of the properties for which Clark solicited fees were sold through ALL, all after he left ALL. Only twenty-seven of the properties for which Holick solicited fees were sold. Telemarketers received a bonus for each property that later sold, so the defendants would have been aware that very few of the properties for which they obtained advertising fees were actually sold. The defendants point out that no bonus was paid when properties were sold directly from seller to buyer rather than through ALL, implying that the failure to receive bonuses did not mean that the properties were not selling. To support their claim that they were misled by ALL management, however, the defendants point out that the Buyer's Division constantly reported how well ALL was doing. Relying on such reassurances is inconsistent with the defendants' implied assumption that properties were being sold directly from seller to buyer. The jury could reasonably infer that the defendants knew that few properties sold at all, either through ALL or directly from seller to buyer. In addition, evidence showed that O'Keefe received complaints from customers, and had in her possession a summons and copy of a complaint in a lawsuit alleging misrepresentations by ALL and specific employees, including herself.

The defendants also challenge the sufficiency of evidence as to the money laundering counts. The money laundering statute prohibits two different categories of transactions -- "promotion" money laundering, 18 U.S.C. 1956(a)(1)(A)(i) ("with the intent to promote the carrying on of specified unlawful activity"), and "concealment" money laundering, 18 U.S.C. 1956(a)(1)(B) ("to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of specified unlawful activity"). The defendants were charged only with the former. The transactions in question were disbursements for advertising, travel and entertainment (including hotels and casinos in Las Vegas), office and administrative expenses, and so on. For a conviction of promotion money laundering, "the Government must prove that the defendant (1) conducted or attempted to conduct a financial transaction, (2) which the defendant knew involved the proceeds of a specified unlawful activity, (3) with the intent . . . to promote specified unlawful activity . . . ." United States v. Wyly, 193 F.3d 289, 295 (5th Cir. 1999).

Holick argues that she had no knowledge of unlawful activity and therefore could not have intended to promote such activity. That argument fails for the same reason as does her argument that the evidence is insufficient to show that she had the intent to defraud. Clark argues that, as he did not personally make the disbursements in question, he was convicted of derivative responsibility as a member of a conspiracy. See Pinkerton v. United States, 328 U.S. 640, 647 (1946); United States v. Garcia, 917 F.2d 1370, 1377 (5th Cir. 1990) ("A party to a conspiracy may be held responsible for a substantive offense committed by a coconspirator in furtherance of the conspiracy, even if that party does not participate in or have any knowledge of the substantive offense."). Clark argues that the money laundering counts must fall since the evidence is legally insufficient for his conviction on the conspiracy count. Because we conclude that the evidence was sufficient for the conspiracy convictions, this argument also fails.

Clark and O'Keefe raise a more substantial argument -- that a "promotion"...